An unexpected departure from a business partner requires a lot of work on your part. A well-thought-out partnership agreement and consultation with our firm can help you navigate a business divorce, but the process can still get overwhelming. If you want the partnership to continue after your partner’s exit, there are some things you need to do to protect the company’s integrity.
Take Ownership of Important Assets
Your understanding of intellectual property, for example, is something that trips up many business owners. Before your partner officially leaves, make sure the business, and no one individual, is listed as the holder of trademarks, copyrights, and patents. If the departing partner is listed as the owner of any trademarks you need for the company, you should work out a trademark assignment, which transfers ownership.
Look Back Over Your Partnership Agreement
It can’t be overstated how useful a well-crafted partnership agreement can help you when it’s time for you or another partner to exit. The contract should cover the way ownership interests are disposed of in the event of planned and unplanned exits. It could stipulate that other partners have the right of first refusal if the partner is selling. Whatever you and your partner decide, get everything in writing.
Get the Partnership’s Finances in Order
Depending on the contributions of individual business partners, some of them might share financial liability with the partnership. Guard against any attempts by the departing partner to transfer responsibility for any debts onto the business. Make sure the partner settles any remaining debts or financial obligations.
Touch Base with Key External Stakeholders
Even if the departing business partner didn’t have many interactions with clients, the partnership still has business relationships with vendors, suppliers, and professional service providers. If you are continuing the business, your contacts will appreciate hearing the news of the departure from you. Assure your important people that they will experience minimal disruptions and that you look forward to running your business for years to come. If the split was acrimonious, avoid the temptation to badmouth your former partner. As Warren Buffett said, “Take the high road—it’s less crowded.”
Conclusion
The exit of a business partner does not mean the company automatically will make a clean break with the departing partner. Even with a thorough partnership agreement, there are plenty of aspects to consider and negotiate. Bringing in a skilled Arizona business attorney is, frankly, the most effective way to protect your finances (and the partnership’s finances, if applicable).
Monahan Law Firm is focused on guiding entrepreneurs through business divorces as efficiently and cleanly as possible. Our team wants to help protect what you’ve accomplished and secure your future. Set up your consultation today.
